Boosting Malawi’s Business Resilience: Overcoming Sustainability Challenges for Entrepreneurs and Investors

Key Business Points

• Access to capital is a major challenge for small and medium enterprises (SMEs) in Malawi, with only a small percentage having access to credit from commercial banks.
• Certification and standards are a significant barrier to market expansion, with many start-ups struggling to meet the requirements of the Malawi Bureau of Standards.
• Availability of raw materials and packaging is a major concern, with fluctuations in prices and lack of foreign exchange impacting the production and sale of goods.

Malawi’s small and medium enterprises (SMEs) are facing significant challenges in growing their businesses despite their promising potential. According to interviews with start-ups currently showcasing their products at the 35th Malawi International Trade Fair in Blantyre, lack of capital, markets, and supply chain disruptions are major hurdles affecting their growth. Lack of access to capital is a major challenge, with many start-ups struggling to secure loans or credit from commercial banks. For example, Chimbale Business Club, which produces peanut butter, is yet to secure markets for its products due to certification challenges and rising prices of groundnuts.

Certification and standards are also a significant barrier to market expansion. Start-ups like Chimbale Business Club are struggling to meet the requirements of the Malawi Bureau of Standards, which is necessary for penetrating new markets. The club has been told to renovate its production house to suit the standards, but this requires an additional K10 million, which is not currently available. Another start-up, Moringa Acres, is facing similar challenges, with lack of foreign exchange to buy packaging materials for its oils and cosmetic products impacting its expansion plans.

The challenges faced by SMEs are not limited to certification and access to capital. Availability of raw materials and packaging is also a major concern, with fluctuations in prices and lack of foreign exchange impacting the production and sale of goods. For example, HoneyBee Consultants, a honey farming firm, is struggling to secure markets for its products despite numerous enquiries, due to the quality of its honey being determined by the equipment used, which is unaffordable to many farmers.

The FinScope Survey in 2024 found that only 10 percent of medium enterprises, five percent of small enterprises, and three percent of microenterprises have access to credit from a commercial bank. This is despite more than 50 percent of SMEs in Malawi being in agriculture-related micro-enterprises, which often lack the collateral required to access loans. A specialised bank could help to alleviate the challenge of accessing finance, according to James Chiutsi, executive secretary of the Chamber for Small and Medium Enterprises. As Malawi’s business community continues to face these challenges, it is clear that addressing these issues will be crucial to promoting economic growth and investment opportunities in the country. Zikovumikiza ufauni, or "let us create jobs", is a phrase that echoes the desire of many Malawians to see their country’s economy thrive, and it is up to the business community to work towards making this a reality.

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